So you’ve decided to make the move and sell your home? The summer of 2012 is shaping up to be a great time to do so.
One of the first things people always ask me is “What do you think I can get for my home?” There are several factors that go into the answer to that question.
When determining what the most likely sales price is, what you need to do first is look at the facts. The numbers don’t lie, and when a home buyer is considering your home, they will also be looking at the numbers. (The reason why is because they will probably need a loan to purchase your house, and the bank will require an appraisal)
You and your Realtor will want to compare your home to other nearby homes that are of similar size, age and style. Many neighborhoods are built within a certain time period and by the same builder, so starting with your community usually makes sense. There are 3 main types of comparison to look at when you are determining your price. These are: Active Homes, Under Contract/Pending Homes, and Sold Homes.
Active Homes. Also Known As: the Competition
It is important to check out what else is out there on the market because that’s exactly what buyers will be doing. You will want to compare houses that are similar in size, age and style that are currently available, and what their “for sale” price is. Then you will want to go a few steps further. Your Realtor will be able to tell you how many Days on Market the house has currently been listed, and if there have been any price drops since it was first listed.
The Days on Market are how many days this home has been available for buyers to see it and hopefully bring an offer. If that number is unusually high, the asking price is probably too high. The number of price drops will indicate whether that particular seller is realistic about their pricing, and will help you determine if you might need to start at the price level they are at now.
Finally, you may want to do a Field Trip – meaning, you may want to go see the competition to compare how your home stacks up. Ask yourself: Does that property have features that are more inviting to a buyer? Is the house clean and clutter free? If I were a buyer would I consider buying this home? At this price? The answers to these questions will help you in your comparison.
Under Contract or Pending Homes
“Under Contract” and “Pending” homes are those that have attracted a buyer’s offer that has initially been accepted by the seller. In Colorado, the main difference between these two terms is that with a “Pending” home, both buyer and seller have initially agreed, but they are awaiting bank approval, as in the case of a short sale.
Again, you and your Realtor will look at the Days on Market and if there were any price drops during the time the home was in Active status. The bottom line is that the final Asking price was the one that attracted an offer from a buyer.
In this instance, however, the Days on Market becomes more important. If the property has gone into Under Contract status in an average amount of time when compared to the current market, without any price drops (or even just a modest drop), then the asking price was likely just right. If the Days on Market were very low, this is an indication that the market is heating up, and you might be able to list your home a little higher.
You might be able to view an Under Contract house, but that is not very common. When an offer has been accepted, both buyers and sellers are working diligently to get to the closing table, so showing it more can be very disruptive and inconvenient to sellers who are busy packing!
By far the Holy Grail of comparison data. This is what the banks will be looking at, and it is the surest indicator of what a buyer will be willing and able to spend for a house like yours.
When looking at Sold data, save yourself some frustration, and let your Realtor pull the actual sold comps. Asking your neighbor what their home sold for seems like a good idea, but I have often seen a seller exaggerate their selling price.
You will want to take a look at the most recent sold data. Depending on your market, this data may go back 3 months, 6 months, or even a year. Be sure to look again at Days on Market and any price drops.
The great thing about looking at actual “solds” is that you have the concrete number right in front of you, including any buyer concessions that were negotiated into the contract. Concessions are often used to help the buyer with closing costs, and by comparing several sales in your area, you will get a good idea if these are common and what percentage buyers usually ask for. (You can also be fairly certain that the property has appraised for at least the sold price if there was a loan involved. In the event of an all cash sale, at least you know that there are buyers out there willing to pay that price.)
Wondering what the most likely sales price would be for your home? Call me today! 720-341-5235